This week I overheard a major social media competitor tell a prospective client: "...well, you can't really measure social media commercially can you? It's like gravity, you know it's there even though you can't see it, so you just have to keep working on it, right?"
I hit the proverbial roof...
Firstly Einstein, (not his real name), you can most definitely measure gravity. And you can also measure the commercial value of social media too, if you engaged a brain cell or two.
Within the context of my obvious agitation with this and the sector in general, I wanted to share how we tackle this in the hope that, in some small way, we can start engaging in social media with a structure and level of respect that it deserves.
What follows therefore is a four step process to build a commercial model for social media engagement, part of a much broader internal framework, but I hope still useful to many of you.
1: Setting social media benchmarks
Consumers interact with brands and vice versa and social media is simply a subset of that process. These consumer interactions are those events where an action takes place between a brand and a consumer that includes anything from reading about you on a blog or a newspaper, to liking you on Facebook.
These interactions, millions of them for many of you, are taking place right now.
The first step in building a commercial framework to value these interactions is to understand what the generation of these interactions would cost your business if you wanted more of them.
More specifically, the objective is to identify what the cost to you would be right now, to generate one additional consumer Action, Conversation or Exposure (ACE):
- Action. The number of people making a material (usually monetary) commitment of some description to you (buying, signing up) as a result of your social media activities.
- Conversation. The number of people who are engaging in a conversation with your brand online, be it via a retweet, a blog comment, etc., across social media.
- Exposure. The number of people you are reaching through your social media campaigns.
To determine the acceptable incremental cost of each of the above you will need to first and foremost audit your marketing activities (including offline and online ideally) and divide your relevant and identifiable marketing costs by the number of actions, conversations, and exposures you are experiencing in your business in its entirety, to give you a Cost Per Action (CPA), Cost Per Conversation (CPCV), and Cost Per Exposure (CPE).
This determines what it currently costs your business to reach consumers, compel them to interact with you, and/or compel them to convert, regardless of the existence of social media as a channel.
Also, it's important to note that Conversations and Actions are the result of Exposure to begin with so they need to be accounted for in ROI calculations as engagement resulting from exposure, therefore the exposure shouldn't be double counted. (Illustrated below).
Secondly, you will also need to calculate the market-determined cost of an additional social media driven interaction (ACE).
You can source this insight from the social networks and platforms themselves. For example, consumer interactions over Twitter have a market value as determined by Twitter's Promoted Tweet advertising programme.
Similarly you can buy ads on Facebook, of which a proportion will convert to likes, which you can test to determine the tradable, market value (CPA, CPCV, and CPE) for Facebook likes for you. This gives you the cost of driving social media interactions if you simply bought them and applied no real creative or innovative engagement value to fuel organic 'shareability'.
Thirdly, and if relevant, determine what your CPA, CPCV and CPE is for your current social media activities only (not including any other marketing activities). This gives you an understanding of how optimal your social media activities are right now against those other two benchmarks.
These three sets of information provide your overall consumer interaction cost, the social media market-value of such interactions, and your current social performance across ACE.
Your social media campaigns and activities need to deliver interactions at a lower cost than those other three benchmarks, or at least below the market value, to be deemed efficient and for you to be confident that a specific social media investment delivered a desirable return.
Note, however, that cost versus desired volume should be considered, i.e. often to get more of something you might be willing to pay more per unit. The ultimate objective of this step is to answer the question – "What would our social media campaign/activity/investment need to achieve for it to be deemed a commercial success for our business?"
You are creating a Commercial KPI Benchmark Table like this:
Table 1: Example Commercial KPI benchmark table for social media
This table should be updated on a regular basis and your social media activities measured against it. Step 2 explains how to conduct that measurement process.
2: Measuring against your benchmarks
Measuring your social media activities against our 3 KPIs (CPA, CPCV, and CPE) is quite straight-forward. Exposure and conversations taking place on Twitter, Facebook, Google+ and similar networks can be monitored and measured with a number of tools and platforms currently available. Sales derived from that exposure and those conversations are very easy to determine too, assuming that you:
- Utilise intelligent website tagging processes to identify referrals from social media networks, websites and platforms against a specific source site/network/platform and a specific, identifiable campaign.
- Utilise decent analytics to track the above, whilst also placing the aforementioned consumer interaction in an attribution model where it can make an undisputed claim for credit.
Note that not all social activities however should be measured against all of ACE's measures equally and some only against one of two of the three KPIs.
For example, if you are looking to raise awareness of something, without a desire or concern for sales, then you could measure the investment required for that awareness campaign by focusing entirely on the Conversation and Exposure parts of ACE, with perhaps even a greater focus on one of these than the others.
Given that Conversations (e.g. replies, retweets, comments) give you an indication of the quality of the Exposure secured (number of people reached in pure volume), you would ideally want to see a good relationship between the two, and different types of campaign can also be measured against each other that way.
Furthermore, a key metric is where Conversations and Action numbers overlap (see below), as this identifies the proportion of your Exposure that can be identified as 'fans', i.e. those that are buying and also conversing with you or about your brand (assuming positive sentiment of course!).
3: Plan for outcomes
With these three KPIs as a foundation you can then plan your social media activities against your desired outcomes. For instance, do you want to use social media to drive sales (Action), or to let people know that you have a new product (Exposure), or, perhaps, to raise the sentiment of your consumer base against your brand (Conversation).
For most companies they'd like their social media outcomes to be a combination of these three, but with each at a different magnitude based on the business and social objectives they are working towards.
With this in mind you can add a Social Media Planning Matrix to our Benchmark Table, to include the following:
Maximum incremental target values
The maximum amount of investment you are willing to make to secure one more addition to your A, C and/or E. For example, perhaps you'd like to secure some brand exposure for a maximum of 0.01p each, or sales at £0.50 each.
Again, you'd initially set this at lower than your benchmark numbers and calibrate it over time as you receive more performance data from your social media campaigns.
Volume desired
The amount of interactions you're aiming for. As we're talking about social media and not paid advertising this has to be an approximation, with the first few campaigns you run being an estimation at best. Over time however, this will become far easier and far more accurate.
There are methods also of reducing the risk this variable represents to your cost outlay. For instance, Greenlight operates a pay for performance social media service whereby campaign costs are incurred by us and the client only pays pro-rata (the maximum target value) for each additional interaction delivered.
Maximum budget
This takes your maximum target value and your desired volume values and, simply, multiplies them together to provide an indication of what would represent a reasonable monetary investment against the objectives set.
This is important as social media isn't free – you will incur costs with whatever you do, with rich assets (video, games, etc.) having significant costs attached, as well as offline-online campaigns (flash mobs and the like), so budgeting is absolutely necessary.
Maximum timeframe
This is the timeframe you are willing to measure the campaign against. Time to see the desired return must reflect the time you are willing to wait for ROI, not the true ROI of the social media campaign.
This is important as some social assets continue to bring in value against our KPIs for a very long time, years in some cases. A good example is how YouTube videos can often continue to attract incremental views many years after they are initially published.
Our Benchmark Table from step one then becomes a more complete media planning matrix:
Table 2: Media Planning Matrix for Social Media
If you're running multiple campaigns you can simply add more columns replicating the Campaign X – Plan columns above. With this, social media becomes a series of activities with objectives and a mechanism to measure those from a commercial perspective, and plan them accordingly.
4: Maximise your shareability
A campaign or activity must engage people and compel them to share what they are seeing or experiencing. This is what separates the expense of buying the interactions from the efficiency of earning them and your ability to maximise your social media ROI, and deliver against a commercial social media plan, relies on maximising that 'shareability'.
Social media 'shareability' is not an exact science by any stretch, but there are a number of activities that can be undertaken to maximise your chances of achieving your maximum levels of 'shareability', and allow you to forecast effectively. These are:
Understand your target market
You must understand your target market to communicate with them – what they like, who they like, how they speak, what concerns them, what they are doing this time of the year, etc. You need to build a profile of your user to market successfully to them, and that is no different in social media.
More specifically, you need to conduct an in-depth audit to answer the following questions:
- Who is your online customer?
- What are people saying about you and your competitors online?
- What are people saying about the brands you sell (if you do), or the partners you work with?
- Who is influential in your space? Which blogs/bloggers, journalists/publications?
Learn quickly
Your first few campaigns will help you understand what broad ACE levels you can achieve and how, at which point all future plans will be far more accurate. Running smaller campaigns first to get an idea of your ACE capability before running broader and more ambitious (read, more expensive) campaigns and activities is always sensible too.
Harness your existing reach
You can add confidence to your Exposure assumptions and therefore some of the Conversation and Action estimates by using your existing consumer reach to guarantee at least some initial traction for your activities.
For example, if your launch of a social media campaign includes the promotion of it to an existing captive audience that you have earned, be it people that have 'liked' you on Facebook, Twitter followers, recipients of your email newsletters or offline catalogues and brochures, then you are practically guaranteed a minimum level of engagement, which would be determined very quickly and easily.
Conclusion
The above framework focuses on the contents of a Commercial Audit for the efficient and effective planning and management of your social media. It is one of only three bodies of work you require to confidently take control of your social media destiny.
The second, part of which is summarised as a point in step four, is an Online Brand Communications Audit, which ensures you know your consumer and who influences them, and the competitive environment you operate within. Without this you won't understand how best to sculpt your activities to meet those commercial goals.
The third, and last document, is your Social Media Strategy, which is the intelligent distillation of the first two documents into a plan of action for the year. Without these three documents you are operating blindly, ignoring the information and insights around you to forge ahead of your competitors.
Taking this approach also opens up the opportunity to utilise innovative different execution and supplier models. Armed with the above, you can can drive considerable value, and importantly, can plan it, measure it and justify it.
Completely contrary to our chap who believes social simply happens 'to you'.
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